FOR PUBLICATION
ATTORNEYS FOR APPELLANTS:ATTORNEYS FOR APPELLEES, INDIANA
DAVID J. BODLEALCOHOL AND TOBACCO COMMISSION
TIMOTHY J. O’HARAITS CHAIRPERSON, VICE-CHAIRPERSON
SCOTT S. MORRISSONAND COMMISSIONERS:
Henderson Daily Withrow & DeVoeSTEVE CARTER
Indianapolis, IndianaAttorney General of Indiana
DAVID L. STEINER
Deputy Attorney General
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE, ANHEUSER BUSCH, INC.:
PETER J. RUSTHOVEN
LARRY A. MACKEY
WILLIAM E. PADGETT
JOHN P. FISCHER
Barnes & Thornburg
Indianapolis, Indiana
ATTORNEY FOR APPELLEES, INDIANA
BEVERAGE ALLIANCE, INC., ZINK
DISTRIBUTION CO., LLC, UNITED BEVERAGE CO. OF SOUTH BEND, INC.
& MONARCH BEVERAGE CO., INC.:
SCOTT R. LEISZ
Bingham McHale LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
LITTLE BEVERAGE CO., INC. and MIAMI)
BEVERAGE, INC.,)
)
Appellants-Plaintiffs,)
)
vs.)No. 49A02-0203-CV-232
)
MARY DePREZ, as Chairperson, BARBARA)
GLASS, as Vice-Chariperson, JAMES L. DAVIS, )
as Commissioner, and GIGI MARKS, as )
Commissioner, each in his or her stated official)
capacity, INDIANA ALCOHOL & TOBACCO)
COMMISSION and ANHEUSER-BUSCH, INC.,)
)
Appellees-Defendants,)
)
INDIANA BEVERAGE ALLIANCE, INC., ZINK)
DISTRIBUTION CO., LLC, UNITED )
BEVERAGE CO. OF SOUTH BEND, INC. and)
MONARCH BEVERAGE CO., INC.,)
)
Appellees-Intervenors.)
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable S. K. Reid, Judge
Cause No. 49D13-0111-CP-1902
October 25, 2002
OPINION - FOR PUBLICATION
MATHIAS, Judge
Little Beverage Co., Inc. and Miami Beverage, Inc. (collectively “Little”) appeal the trial court’s grant of summary judgment in favor of the Alcohol and Tobacco Commission and its commissioners individually (collectively “ATC”), and Anheuser-Busch, Inc. (“A-B”), and its judgment in favor of A-B on the declaratory relief A-B requested in its counterclaim, raising the following issues for review:
I. Whether, after the repeal of Rule 28, exclusive beer distribution territories are now permitted in Indiana under Title 7.1 of the Indiana Code;
II. Whether the ATC violated the Administrative Procedures Act by the “sunset” expiration of Rule 28 and by its de facto adoption of the contrary rule;
III. Whether the expiration of Rule 28 operated as a revocation or alteration of Little’s Indiana beer wholesaler’s permit; and,
IV.Whether the trial court erred in granting A-B’s request for declaratory judgment on its breach of contract counterclaim.
We affirm.
Facts and Procedural History
In 1973, the Indiana General Assembly repealed Title 7, Alcoholic Beverages, and enacted Title 7.1, Alcoholic Beverages. The general purposes of Title 7.1 are set out in Indiana Code section 7.1-1-1-1: “(a) to protect the economic welfare, health, peace and morals of the people of this state; (b) to regulate and limit the manufacture, sale, possession, and use of alcohol and alcoholic beverages; and (c) to provide for the raising of revenue.” The General Assembly created the Indiana Alcohol Beverage Commission, currently known as the Indiana Alcohol & Tobacco Commission (“ATC”), to administer Title 7.1 and gave the ATC power to promulgate rules and regulations. Ind. Code § 7.1-2-1-1 (1982 & Supp. 2002); Ind. Code § 7.1-2-3-7 (1982). Indiana Code section 7.1-2-3-31 also provides that: “The commission and the chairman shall have, in addition to the express powers enumerated in this title, the authority to exercise all powers necessary and proper to carry out the policies of this title and to promote efficient administration by the commission.”
Over the years, pursuant to this authority, the ATC has promulgated a series of rules found in the Indiana Administrative Code title 905. Rule 1-28-1(3) (“Rule 28”), promulgated in 1979, prohibited beer distributors in Indiana from having exclusive territories. In 1996, the General Assembly enacted Indiana Code section 4-22-2.5-2 (the “Sunset Law”), which provides in pertinent part that all administrative rules[1] expire on January 1 of the seventh year after the year in which the rule takes effect, and any administrative rule in force on December 31, 1995, expires on January 1, 2002, if the administrative agency takes no affirmative action to readopt it. Ind. Code § 4-22-2.5-2 (2002).
In June 2001, the ATC posted a notice on its website to explain that it did not intend to readopt Rule 28. On July 1, 2001, and August 1, 2001, the ATC published additional notices in the Indiana Register listing the rules it intended to readopt effective January 1, 2002. Rule 28 was not included in this readoption list. On August 28, 2001, the ATC met to receive testimony regarding Rule 28. At the conclusion of this meeting, the ATC voted 3-0 not to readopt Rule 28. This position effectively permitted exclusive beer distribution territories in Indiana effective January 2, 2002. On September 4, 2001, the ATC again published notice of the rules it intended to readopt. This notice also omitted Rule 28. Thus, Rule 28 expired as of January 1, 2002.[2]
Little distributes A-B beer products in Indiana. Its distributorship agreement with A-B was executed in 1997 and provides for an exclusive distributorship for Little in a specified area, unless prohibited by law. Under the agreement, where such exclusivity is legally prohibited, Little’s otherwise exclusive territory is designated as its “primary area of responsibility,” but it retains the right to sell beer to retailers in other areas, a practice called “transshipping.” Under Rule 28, Little did much transshipment and generated a significant portion of its business from selling beer outside its area of primary responsibility. On November 15, 2001, A-B announced to all of its Indiana wholesalers, including Little, that it intended to enforce the exclusive wholesale territories in its distributorship agreements effective January 2, 2002, upon the “sunset” of Rule 28.
On November 28, 2001, Little filed suit against the ATC and A-B seeking injunctive relief to prohibit the sunset of Rule 28. The Indiana Beverage Alliance, Zink Distribution Company, LLC, United Beverage Company of South Bend, Inc., and Monarch Beverage Co., Inc. (“Intervenors”) intervened in the suit, arguing in favor of Rule 28’s sunset. A-B filed a counterclaim asking for a declaratory judgment that Little would be in breach of contract if it continued transshipping. Both parties moved for summary judgment, stipulating that there were no genuine issues of material fact.
The trial court entered summary judgment in favor of the ATC and A-B and denied Little’s motion for summary judgment and its request to temporarily enjoin the expiration of Rule 28, finding that Little had failed to meet its burden of proof on each element which it was required to show to obtain a temporary injunction. Further, the trial court found in favor of A-B on its counterclaim. Little now appeals.
Standard of Review
When reviewing the grant or denial of a summary judgment motion, this court applies the same legal standard as the trial court, i.e., summary judgment is appropriate when no designated genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Ind. Ins. Co. v. Am. Cmty. Servs., Inc., 718 N.E.2d 1147, 1152 (Ind. Ct. App. 1999); May v. Frauhiger, 716 N.E.2d 591, 594 (Ind. Ct. App. 1999) (citing Ind. Trial Rule 56(C)). Our standard of review is not altered by cross motions for summary judgment on the same issues. Ind. Ins. Co., 718 N.E.2d at 1152. A party appealing the denial of summary judgment carries the burden of persuading this court that the trial court’s decision was erroneous. Id. The movant must demonstrate the absence of any genuine issue of fact as to a determinative issue and only then is the non-movant required to come forward with contrary evidence. Id. (citing Jarboe v. Landmark Cmty. Newspapers of Ind., Inc., 644 N.E.2d 118, 123 (Ind. 1994)). This court may not search the entire record but may only consider the evidence that has been specifically designated. Id.
All pleadings, affidavits, and testimony are construed liberally and in a light most favorable to the nonmoving party. May, 716 N.E.2d at 594. Even when facts are undisputed, summary judgment is not appropriate if those undisputed facts “‘give rise to conflicting inferences which would alter the outcome.’” Id. (quoting Underwood v. City of Jasper Mun. Util. Serv. Bd., 678 N.E.2d 1280, 1282 (Ind. Ct. App. 1997), trans. denied).
The trial court made findings and conclusions in support of its entry of summary judgment. Although we are not bound by the trial court’s findings and conclusions, they aid our review by providing reasons for the trial court’s decision. GDC Envtl. Servs., Inc. v. Ransbottom Landfill, 740 N.E.2d 1254, 1257 (Ind. Ct. App. 2000). If the trial court’s entry of summary judgment can be sustained on any theory or basis in the record, we must affirm. Id.
I. The Legality of Exclusive Territories After the Repeal of Rule 28
A. The History of Rule 28
Between the repeal of Prohibition in 1933 and 1967, territorial limitations on wholesalers of alcoholic beverages have either been allowed or prohibited at various times by Indiana statutes. Barco Beverage Corp. v. Ind. Alcoholic Beverage Comm’n, 595 N.E.2d 250, 253 (Ind. 1992). During those thirty-four years, federal law would have allowed such restrictions. However, in 1967, the United States Supreme Court decided United States v. Arnold Schwinn & Co., 388 U.S. 365, 382 (1967), in which it held that a manufacturer could not control the distribution of its products after the point at which they were sold and the risk of loss transferred to the wholesaler. Thus, the court determined that contractual restrictions which limited a dealer or distributor to a geographic area were illegal and a per se violation of the Sherman Antitrust Act. Id.
In this legal climate, in 1973, the General Assembly adopted Title 7.1, without explicit language that prohibited exclusive territories. Under Schwinn, no such directive was necessary. Four years later, however, the Supreme Court reversed course and overruled Schwinn in Cont’l T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 59 (1977), effectively permitting exclusive territories as a matter of federal antitrust law. In response to Cont’l T.V., in March 1979, the ATC promulgated Rule 28, which restored the previous Schwinn rule prohibiting exclusive territories, this time as a matter of alcoholic beverage regulation within the State of Indiana.
In 1983, the General Assembly considered an amendment to a bill which would have effectively removed the Commission’s authority to promulgate Rule 28. Barco, 595 N.E.2d at 253. The amendment failed to pass in the House. In 1985, a bill was introduced in the House which sought to invalidate Rule 28, but it also failed to pass. Id. One year later, a failed attempt was made in the Senate to amend a Senate bill to permit exclusive territories for beer wholesalers. Id. During the 1989 legislative session, both the Senate and the House passed a bill, which would have overruled Rule 28, but the bill was vetoed by Governor Bayh. Id. The bill was then defeated when it was presented to both houses for override following Governor Bayh’s veto. Id.
However, pursuant to Indiana Code section 4-22-2.5-2, known as the Sunset Law, Rule 28 expired when the ATC failed to readopt it. A bill introduced during the 2002 legislative session, which sought to reinstate Rule 28, was defeated in a Senate committee. Appellees’ App. pp. 6-7; S.B. 369, 112th Gen. Assem., Reg. Sess. (Ind. 2002) available at Prior to Rule 28’s expiration, Indiana was the only state in the country that prohibited exclusive territories. SeeMiller Brewing Co. v. Bartholemew County Beverage Co., Inc., 674 N.E.2d 193, 206 n.9 (Ind. Ct. App. 1996), trans. denied.
B. The Parties’ Contentions and Discussion
By statute, beer wholesalers are permitted to sell beer throughout the State of Indiana. Ind. Code § 7.1-3-3-5(b) (1982 & Supp. 2002). Various statutes limit who may hold a beer wholesaler’s permit. Brewers, such as A-B, are subject to many of these limitations. For instance, Indiana Code section 7.1-3-3-18 speaks to financial control: it prohibits a brewer from having or transferring a financial interest in a beer wholesaler. Also, Indiana Code section7.1-5-9-2, prohibits a brewer from holding, acquiring, possessing, owning, controlling, or having an interest, claim, or title, in or to an establishment, company, or corporation holding or applying for a beer wholesaler’s permit.
Little argues that the plain language of Title 7.1 prohibits the enforcement of exclusive distribution agreements. Specifically, Little asserts that beer wholesalers can sell beer throughout the State and exclusive distribution agreements give the brewer more control over the wholesaler’s business than is permitted under Title 7.1, particularly Indiana Code section 7.1-5-9-2. Accordingly, it maintains that Rule 28 is superfluous, and its expiration has not changed the legal landscape of beer distribution in Indiana. The ATC and A-B respond that Title 7.1 does not prohibit exclusive distribution agreements between a brewer and a wholesaler and that the expiration of Rule 28 clears the way for such agreements.
In support of their arguments, A-B and ATC rely primarily on our supreme court’s opinion in Barco. In Barco, the issue presented on appeal was whether the ATC had authority to promulgate Rule 28. Barco, 595 N.E.2d at 251. Our supreme court determined that the ATC did have such authority. Id. at 251-52. Noting that our court had also concluded that the ATC had authority to promulgate Rule 28, the supreme court determined that
[t]he court [of appeals] correctly concluded that (1) the legislature had neither expressly forbidden nor permitted the use of territorial limitations by alcoholic beverage wholesalers, and (2) although wholesalers had the right to sell alcoholic beverages anywhere in the state, the statutes did not guarantee that right or prohibit its alienation.
Id. at 252 (citing Barco Beverage v. Ind. Alcoholic Beverage, 563 N.E.2d 658, 662 (Ind. Ct. App. 1990), trans. granted).
The court then addressed Barco’s argument that Rule 28 represented an unconstitutional violation of the separation of powers guaranteed by our Indiana Constitution, and concluded that
the legislature established the purpose of the Act and provided that the Commission shall have the power to promulgate rules and regulations governing the conduct of the business of wholesalers and to “exercise all powers necessary and proper to carry out the policies of this title.” We hold that these express policies and delegation of powers set forth by the Indiana General Assembly provide sufficient standards or guidelines to enable the Commission to constitutionally enact a rule prohibiting exclusive territorial limits on the right of wholesalers to sell alcoholic beverages throughout the State of Indiana.
Id. at 254 (quoting Ind. Code § 7.1-2-3-31 (1982)).
Barco also argued that the ATC exceeded its statutory authority in promulgating Rule 28. The court determined that the ATC did not exceed the statutory authority conferred upon it by the General Assembly because it gave the ATC “specific power to promulgate rules governing the conduct of the business of permittees governed by the Act.” Id. Our supreme court also made the following observations:
Had the legislature believed that Rule 28 was not in conformance with its policy or was outside of the powers delegated to the Commission, it has had several opportunities either to repeal Rule 28 or to amend the statute so as to deny the Commission the power to promulgate such a rule. Ultimately, the legislature has rejected these options, giving credence to the Commission’s argument that Rule 28 is valid because of legislative acquiescence. However, we need not rely on legislative acquiescence to determine that the legislature, in Title 7.1, established the general purposes of the act and conferred upon the Commission the authority not only to regulate the business of permittees, but also to exercise all powers necessary and proper to carry out those purposes. The Rule passes both constitutional and statutory muster.
Id. at 255.
In Barco, our supreme court clearly held that the ATC had both constitutional and statutory authority to promulgate Rule 28. Therefore, it also stands to reason that the ATC had the authority to allow Rule 28 to “sunset,” or expire, by failing to readopt it.
In addition, as our supreme court noted in Barco, the General Assembly has not expressly forbidden exclusive territories. Indiana Code section 7.1-5-9-2 merely provides that a holder of a brewer’s permit may not “control” an establishment, company, or corporation holding or applying for a beer wholesaler’s permit. While Little argues that the term “control” must be interpreted to mean that exclusive territories are not permitted,[3] the ATC notes that some states have similar regulatory bans on brewer control of wholesalers, and yet those same states either permit exclusive territories or mandate them. Br. of Appellee ATC at 13 (citing Connecticut and Texas as examples of states that statutorily prohibit brewer control, but allow exclusive territories).[4] Additionally, as was suggested in Barco, the General Assembly’s enactment of the Sunset Law allowed Rule 28 to expire. The General Assembly could have exempted Rule 28 from expiration, but chose not to do so.
Finally, we note that Little entered into a contract with A-B in 1997, after the General Assembly enacted the Sunset Law, which included provisions automatically implementing exclusive territories if they were permitted in Indiana. Therefore, when Little entered into the agreement with A-B, it was aware that Rule 28 would expire unless it was readopted by the ATC.
Our courts have never held that Indiana Code section 7.1-5-9-2 does not permit exclusive territories. This fact was reinforced by our supreme court’s statement in Barco that “the legislature had neither expressly forbidden nor permitted the use of territorial limitations by alcoholic beverage wholesalers.” Barco, 595 N.E.2d at 252. After the United States Supreme Court determined that exclusive territories did not violate the Sherman Antitrust Act, they were forbidden in Indiana only by the ATC’s promulgation of Rule 28 in 1979. The General Assembly allowed Rule 28 to expire by enacting the Sunset Law. Thereafter, the ATC clearly had the authority to readopt Rule 28 or to let it expire by operation of law. The ATC chose the latter course of action; therefore, exclusive territories are no longer forbidden in Indiana, and the trial court did not err when it granted the ATC’s and A-B’s motions for summary judgment.
II. The “Sunset” of Rule 28 and the APA
Little next argues that the ATC violated the Administrative Procedures Act (“APA”) when it allowed Rule 28 to “sunset” without adhering to the notice requirements of the APA. The APA provides that when an agency decides to repeal a rule, there are several notice requirements that must be met, including newspaper publication and publication in the Indiana Register. Ind. Code §§ 4-22-2-13, -23, -24 (2002). The notice must set forth specific information as required by statute. Ind. Code § 4-22-2-24(d). Also, after the required public notice is given, the agency must convene a public hearing to allow for comment on repeal of the rule. Ind. Code § 4-22-2-26 (2002). Therefore, Little argues that the “Sunset Law,” which contains no provisions regarding notice, is a general statute, and the procedures in the APA, a more specific statute, must be followed. Br. of Appellant at 39 (citing Ind. Alcoholic Beverage Comm’n v. Osco Drug, Inc., 431 N.E.2d 823, 833 (Ind. Ct. App. 1982) for the principal that where one statute deals with a subject matter in general terms and another statute deals with the same subject matter in a more detailed manner, the more specific statute will prevail).